How did we improve our client’s business with the help of Power BI?
A global brand with a branch in the Adriatic region had several problems:
• Uncollected receivables
• Sales without margin (price lists in disarray)
• Hidden losses
• Unprofitable product lines and stockpiling
• Lack of focus in sales and procurement, everything was done spontaneously
Why this business issues occurred:
• In large systems, a slight delay in customer payments is not a major problem. The issue arises when timely action is not taken, allowing customers to exploit repeated delays. This often leads to uncollectible receivables and eventual write-offs. The root cause lies in slow reporting and the inability to get a clear overview of all customers. For example, collectors may focus on a client late with three invoices, while failing to notice that three major clients each have over 70% of their annual turnover unpaid. This goes unnoticed because preparing reports requires 4 hours of manual work, which is rarely available, so analytics is performed only every 3–6 months, by which time it is already too late.
• When there is no clear, real-time visibility of net margin 1 and 2, it is easy for input costs (especially with recent inflation) to increase without being reflected (or being incorrectly reflected due to the lack of a system) in the sales price. As a result, the selling prices to customers can end up with a negative net margin 2.
• Without the ability to perform daily controlling, hidden losses and expenses that senior management never actually approved can easily creep in.
• In building the sales mix, some products are often sold with a lower margin while profits are generated through the sale of other related products within the same brand/segment. The problem arises when, after two months of purchasing the full mix, a customer decides to continue buying only the product with the minimal margin, yet sales only realizes this after half a year. With 400 items, this happens frequently, and reporting cannot keep up because it is mostly manual and lacks flexibility.
• There was no application of the AI-Pareto principle, either for customers or for the product mix. Resources and time were spent on products that the market was already phasing out, while stocks of excellent new products were delayed because procurement failed to react on time to jumps in sales.
How the Power BI reporting system solved existing problems and improved business performance by 30%+ in the first year:
- We connected directly to the databases of accounting and inventory management—important to note that these were two separate systems, which we integrated into a single whole. In addition, we incorporated 4–5 different external data sources (e.g., new price proposals) into this unified system.
- We developed an automated reporting system that updates daily and provides insights into:
• Profit and loss statement down to the level of analytical accounts
• Inventory – total sales, days outstanding, average sales over the last 6 months, with LOW/OOS alerts
• Sales across dynamic groups of customers, items, and sales mixes
• Accounts receivable overdue analysis – broken down by days (30, 60, 120, 180, etc.)
• Collection dynamics of individual customers or customer groups
• Price lists including net margin 1 and 2 across product/customer groups, as well as margin projections with new prices - System maintenance takes approximately 8 hours per month, yet it replaces 95% of all other manual analyses and data preparation. This represents a massive time saving for all employees.
- Reporting dynamics are tailored to all levels of management. A sales manager can review profitability every morning at the level of key customers and product groups, while the same report can also be used by an analyst for detailed checks down to the lowest data levels. The model can also be accessed via Excel for specific analytical needs.
- Price lists are now far more accurate and transparent. Since implementation, not a single product for any customer has had a negative net margin 2. Customers are also clearly informed about the logic behind price increases, which strengthens their trust in fairly defined pricing.
In essence, the introduction of the system reduced decision-making time from once or twice a month to a daily level. Every decision is now backed by data, which ensures business security. Correcting wrong decisions has also been shortened to a minimum, as the system quickly shows the direction of sales, receivables, and inventory trends.
The entire system was implemented within 45 days (with the support of senior management and IT), and the change after 6 months was already evident.
The client is more than satisfied with the system, and we are equally pleased to have successfully completed another implementation!
